Inlaws have a UTMA account for my daughter for college tuition.

Forum|Forum|4 years ago
May 6, 2021
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My inlaws have a UTMA account for my 18 year old daughter for her college tuition. They sent me a whole package of forms they say that I have to file with my daughter's taxes. They include dividends, stock sales and capital gains distributions on those sales. I do not know where to begin. Do I really need to include any of this on her taxes since it is from a UTMA account used for the sole purpose of college tuition? If I do where in turbotax deluxe do I include this information?

Hal_Al

Employee

Q. Do I really need to include any of this on her taxes since it is from a UTMA account used for the sole purpose of college tuition?

A. Yes. Dividends, interest, capital gains distributions and capital gains from the sale of stock and mutual funds are all reportable on her tax return. Using the money for college doesn't change that.

You probably thinking of modern tuition savings plan (ESA, 529, QTP). Those are all tax free, if used for education. But, the UTMA- UGMA accounts don't qualify. She'll also be subject to the "kiddie tax", when a portion of the income is taxed at the parent's (not the grandparent's) marginal tax rate.

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in Home & Business)

- Wages & Income

Scroll down to:

-Interest & Dividends

- Dividends on a 1099-DIV (Capital gains distributions are entered in box 2a at the 1099-DIV screen).

-Investment Income

-Stocks, mutual funds, Bonds, Other